University of California’s $28 million system for pension payouts produced chaos and complaints

The University of California is one of the world’s most prestigious centers of higher education and cutting-edge medical, technological and social research.

One assumes that its faculty and administrative cadre are saturated with extremely bright people. Nevertheless, UC has succumbed to a managerial disease that has afflicted other corners of state government — the chronic inability to successfully adopt information technology.

The state has spent billions of dollars on high-tech projects meant to make state agencies more efficient and responsive. But those efforts have either failed completely, worked only partially or couldn’t meet implementation deadlines.

The syndrome has afflicted many agencies. The most obvious example is the Financial Information System for California, with the catchy abbreviation of FI$Cal.

It was supposed to be a one-stop financial management tool. But since FI$Cal launched in 2005, it has consumed more than a billion dollars and is not likely to be completed until sometime in the next decade.

It’s a bureaucratic zombie, not quite alive but not quite dead.

‘Glitches and bad data’

UC’s attempt to upgrade its pension system echoes that experience. As described in an article by Politico, a website devoted to politics:

“In April 2019, the University of California unveiled a new computer program that school officials promised would overhaul its clunky, outdated system for disbursing pension payments to more than 150,000 former employees.

“Glitches and bad data, however, marred the launch, delaying payments and causing other problems. Now, six years later, the university is still embroiled in a bitter legal fight with the contractors it hired to build the system, claiming the companies repeatedly misled and defrauded the university.”

The companies said the allegations — and the university’s demand for tens of millions of dollars in damages — are baseless. One company called the protracted legal battle a “vindictive crusade.”

UC manages its own pension system, with more than $100 billion in assets, delivering benefits to 151,000 former employees, ranging from retired university chancellors to former janitors.

Twelve years ago, UC officials awarded contracts to two companies, Sagitec Solutions and Linea Solutions, worth $28 million to upgrade the pension system’s outdated computer system.

When the upgrade was tested a half-decade later, chaos erupted. Pension payments weren’t delivered on time, pension calculations were riddled with errors, UC retirees pelted the system’s administration with complaints, and the contractors and UC executives began pointing fingers of blame at each other.

UC accused the vendors of shoddy work. The vendors complained that UC officials muddied the waters with requests for multiple changes as the system was being installed. The conflict is still in the courts.

Troubled tech

UC’s failed tech project follows the pattern of other troubled efforts to use information technology over the last couple of decades.

I once asked an acquaintance who sold computer software to state agencies why so many systems failed. He said bureaucrats often don’t know what they want and are rarely conversant about tech capability, leading to misunderstandings about what will be done.

When the list of troubled projects began to stack up, the Legislature and the governor created the California Department of Technology to oversee tech adoption. However, two years ago State Auditor Grant Parks issued a sharply worded report on its shortcomings.

“CDT has broad responsibility and authority over nearly all aspects of IT (information technology) in the state, including providing strategic direction, assessing IT security, and performing project oversight,” Parks told the Legislature. “However, it has not fulfilled important responsibilities in these areas, resulting in significant consequences for the state.”

The beat goes on.